PTCL’s proposed merger with Telenor Pakistan has hit another roadblock after the Competition Commission of Pakistan (CCP) flagged serious concerns over PTCL’s transparency, funding sources, and business ethics. Regulators say missing documentation and ambiguous post-merger investment plans must be addressed before any further progress.
Regulatory Demands and Missing Documents
The CCP has formally asked PTCL to submit all pending paperwork, especially detailed projections for funding future capital expenditures amid ongoing financial losses. Officials want clarity on whether PTCL’s parent, UAE-based Etisalat (e&), will inject fresh equity to cover accumulated deficits and participate in the forthcoming 5G spectrum auction.
Questions Over Funding and Profitability
Both PTCL and its subsidiary Ufone are reporting significant losses, prompting regulators to question how the combined entity will turn profitable. The commission is demanding a binding commitment to the investment milestones outlined in PTCL’s earlier business plan and full disclosure of proposed funding sources—be it bank loans or equity injections.
Scrutiny of International Direct Dialling Data
Beyond finance, the CCP raised red flags about PTCL’s handling of international direct-dialling (IDD) services. Regulators have requested precise data on call volumes and rate structures from 2022 to 2024, as well as detailed billing arrangements between PTCL and Ufone. Comparisons with competitors like Jazz, Zong, and Telenor are also on the table.
Revenue Reporting and Related-Party Transactions
In its review, the CCP identified inconsistencies in revenue lines labeled “Other Core Products” and “Other Retail/Wholesale,” noting substantial income figures without matching volume or rate disclosures. The absence of clear party-transaction details, transfer-pricing methodologies, and access-agreement terms has further fueled regulatory scepticism.
Outlook for the Merger
With regulators unconvinced by PTCL’s generic responses and incomplete data, the merger’s timeline remains uncertain. The CCP’s insistence on detailed operational and financial roadmaps underscores broader concerns about market competition and the viability of this landmark deal.
